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Tuesday, 24 May 2011

Scintillatingly sculpted by the Chartered Institute of Patent Attorneys (CIPA), the PCC Pages seek to explain how litigation works in the recently-revamped Patents County Court (PCC) for England and Wales, taking as its theme a dispute between Cautious Co and IPOff Ltd as to whether IPOff has infringed the IP rights of Cautious in its robotic octopus. In this episode, the 28th, CIPA President Alasdair Poore throws off his jetlag and takes a further voyage into the ever-fascinating area of costs.

"Inspired by last week's note on costs, Cautious’ patent attorney is exploring further.

First, can he get around all this difficult assessment business, and providing detailed records – and incidentally make forecasting costs for his client easier – by just agreeing to charge the maximum in each category when he carries out work for his client?

This seems like quite a neat innovation – a couple of firms of solicitors are apparently offering it.The answer (which you should ideally be able to deduce from last week’s note) has also been given in a decision last week, Indigo Furniture Ltd v Futurelook Ltd & Another[2011] EWPCC 13.A Manchester firm had offered a fixed price package – the maximum scale fee – to Indigo Furniture.They issued a proceedings with a statement of case.As the defendant did not respond, they applied for and obtained default judgment, and asked for costs for the two steps they had followed: preparation of the statement of case (£6,125), and application for default judgment (£2,500).They did not provide any detailed breakdown but made it clear that their client had incurred costs significantly exceeding these, not least because another firm of solicitors had initially been involved.Judge Birss said that this (claim for costs) was based on a misconception:

“The various sums provided for by the rules and practice direction in this system are maxima (see the Westwood case here). The costs spent or awarded for any particular stage may not be as high as the maximum for a particular stage”

Judge Birss made it clear (para 18) that in future, even where it was pretty simple, he would expect to see the costs breakdowns referred to in Westwood.In this case, it would not however have been proportionate to schedule yet another hearing just for costs, so he would make an assessment.He assessed only £1,000 for the application for default judgment (limit £2,500), on the basis that this was pretty straightforward (para 14).He assessed the maximum for preparation of the statement of case (£6,125) because, although not complex, the case had involved a substantial number, 35, furniture designs; and it appeared clear that significantly greater costs had been incurred (para 15).

Judge Birss explained that it was open to the solicitors to charge on a simple scale fee basis (para 12), but that would not necessarily entitle their client to recovery from the other party on the same basis and that any recovery should be supported by an appropriate breakdown of the actual time/costs incurred (para 18).So the scale costs approach may provide an easy yardstick for a client, but may not mean the client gets back all they have spent.

The second question Cautious's patent attorney has been pondering is when above-scale costs might be awarded.Readers will recollect that the principle is that costs will be limited to the maximum amount listed inPD 43-48 25C Table A (subject to the overall maximum inCPR 45.42).Judge Birss emphasised in Westwoodthat the discretion will be “will very rarely (if ever) be exercised ” (para 20).However there is a clear exception set out in CPR 45.41(2): “This [limit] does not apply where – (a) the court considers that a party has behaved in a manner which amounts to an abuse of the court’s process.”

When this was discussed in the IPCUC Working Group, the view was expressed that this would be similar to the situations in which the IPO could award off-scale costs.The principles were explored in Rizla Ltd’s Application [1993] RPC 365.The test there was that “the conduct of the [party] constituted such exceptional circumstances that a standard award of costs would be unreasonable”, and Anthony Watson QC said that

“I believe a case such as the present can only be regarded as exceptional if it can be shown that the losing party has abused the process of the Comptroller by commencing or maintaining a case without a genuine belief that there is an issue to be tried.… There are of course a large number of other circumstances such as deliberate delay, unnecessary adjournments etc. where the Comptroller will be entitled to award compensatory costs”.

They are now exemplified in Tribunal Practice Notice TPN 2/2000, para 9 (updated by TPN 4/2007, which does not alter the substance). But a word of caution: the IPO’s discretion in awarding above-scale costs is not fettered by statute or rules (see Rizla, at 373, l31, section 107, Patents Act 1977), although it must be exercised judicially.The practice appears to reflect “abuse”.However, it is open to the IPO to change its practice..The question of what was an abuse of process (in issuing proceedings) was discussed to some extent in Cautious's patent attorney's consideration of whether to seek to strike out IPOff's claim in the Patents Court, on the grounds that it should have been brought in the PCC.There is some exploration of situations which might be regarded as an abuse at paragraph 4.4.3 in the White Book – but in broad terms taking a step when you know that you have no prospect of success or where it is taken for an ulterior purpose and there is no legitimate justification will be likely to be an abuse.It seems likely that the discretion will be exercised sparingly.But

“if the [judge] were of the view that a case had been brought without any bona fide belief that it was soundly based or if in any other way he were satisfied that his jurisdiction was being used other than for the purpose of resolving genuine disputes” (Rizla at 374),

it may still be used.In that case, it still does not open up all the costs in the proceedings; only the costs attributable to the abuse of process will be off-scale".

Monday, 23 May 2011

In what may appear to non-US lawyers to be a curious turn of events, the US Court of Appeals for the Federal Circuit has denied a joint request by TiVo Inc. and EchoStar Corp. to dismiss an appeal after the parties reached a US$ 500 million settlement of a patent infringement action brought by Tivo in 2004. According to Law.com's Texas Lawyer

"On May 10, the Federal Circuit issued an en banc order in TiVo Inc. v. EchoStar Corp. denying the companies' joint motion to dismiss the appeal, which had led to a divided en banc ruling on April 20. The court noted that the parties did not inform it of any settlement before it issued that decision.

In that April ruling, the Federal Circuit vacated a $110 million award against EchoStar Corp. for continued infringement of TiVo Inc.'s patents after a permanent injunction, but affirmed a $90 million award against EchoStar as a sanction for its contempt finding. On April 29, the companies reached a settlement whereby EchoStar and the Dish Network Corp [an EchoStar subsidiary] agreed to make an initial payment of $300 million to Tivo and $200 million in six annual installments between 2012 and 2017. ... TiVo will also give Dish and EchoStar licenses for the DVR technology, and EchoStar will give TiVo a license for certain DVR-related patents. The companies also agreed to dismiss all pending litigation with prejudice and to dissolve all injunctions against Dish and EchoStar.

The seven years of litigation between the two companies was initially about whether EchoStar infringed TiVo's digital video recorder technology patent. It later centered on whether EchoStar's redesign of its technology still infringed and whether EchoStar's actions amounted to contempt of the district court's permanent injunction order.

According to Lourie, the companies informed the Federal Circuit on May 2 that they had settled the case on April 29 and asked the court to dismiss the appeal.

"The parties did not inform us that they had settled the matter before issuance of our decision nor do they inform us that they had agreed to a disposition of the matter dependent upon our decision," wrote Lourie. "It is clear that if the parties had entered into such an agreement before issuance of our decision, it was counsel's duty to inform this court of the agreement."

If the court granted the parties' motion at this stage, days before issuance of a mandate, the result would be modification or vacatur of the en banc judgment "which is neither required nor a proper use of the judicial system," wrote Lourie. He also cited 7th, 9th and 11th Circuit rulings supporting that conclusion.

"The parties are of course free upon our remand to the district court to request that the district court dismiss the complaint and vacate its previously imposed sanctions because they have settled the underlying matter," Lourie wrote. "However, consistent with our sister circuits, we conclude that we should not dismiss the appeal after it has been decided." ...

TiVo's lead trial counsel, Morgan Chu, a partner at Los Angeles-based Irell & Manella, said the Federal Circuit's action does not affect the settlement reached by the parties. "The court's mandate will now issue in a few weeks, on the usual schedule," Chu said. "As the court's order stated, the parties will then be able to return to [Eastern District of Texas Chief] Judge [David] Folsom to have the cases dismissed." ...

In its April 20 ruling, the Federal Circuit affirmed Folsom's $90 million sanction award against EchoStar. Folsom had found EchoStar in contempt of the disablement provision of the permanent injunction, which required it to disable the infringing DVR technology in its products, including those that were with customers.

That ruling also vacated Folsom's finding that EchoStar was in contempt of the permanent injunction's infringement provision, which ordered it to stop making, using or selling infringing receivers. Another order in the ruling vacated Folsom's $110 million award against EchoStar Corp. for continuing to infringe TiVo Inc.'s patents after a permanent injunction".

Tuesday, 17 May 2011

In an effort to make things
clearer for litigants, every
brick is labelled "brick" ...

Masterfully managed by by the Chartered Institute of Patent Attorneys (CIPA), the PCC Pages seek to explain how litigation works in the recently-revamped Patents County Court (PCC) for England and Wales, taking as its theme a dispute between Cautious Co and IPOff Ltd as to whether IPOff has infringed the IP rights of Cautious in its robotic octopus. In this episode, the 27th, CIPA President Alasdair Poore takes time out from the constant round of riotous partying to which participants of the annual International Trademark Association meeting must reluctantly subject themselves, in order to bring us this, the next instalment:

Cautious & Co are still fully engaged with their patent and design right infringement proceedings in the Patents County Court. Their patent attorney is enjoying a break in San Francisco. It is raining just like England – well, wetter actually.

In a damp moment, reflecting on IPOff’s director’s break at Christmas snorkeling in the sun, Cautious’s patent attorney has news of two more bricks in building a solid understanding of PCC procedures: publication of the PCC Guide; and a judgment on assessment of costs. Boring stuff? Perhaps, but stuff which means that patent attorneys can be more confident in advising clients to use the PCC.

Brick 1: The PCC Guide is available here via PatLitand CIPA. It will be published on the Court’s website soon -- but just how long it will take to get there is not yet clear.

Brick 2: Costs: In Dame Vivienne Westwood v Anthony Edward Knight([2011] EWPCC 11), Judge Birss QC has assessed costs. His judgment explains in detail the process for assessment, including assessment of individual elements and how the maximum limits will be applied.

The general approach is set out in the Civil Procedure Rules, CPR 44.3, subject to CPR 45.42. This provides that the Court has a discretion (CPR 44.3(1)), generally the unsuccessful party will be required to pay the successful party’s costs (CPR 44.3(2)), and the court should consider the conduct of the parties, whether a party is partly successful (CPR 44.3(4)), and complexity (CPR 45.42(4)):

The costs recovered are limited in two ways: there is an overall costs cap of £50,000 (for the proceedings on liability), after taking into account any set off of costs due to the other party; and there is a costs cap for each individual stage (CPR 45.42 and PD 43-48 25 and Table A)

In this case there was no set off – all the costs were to be awarded in favour of Dame Vivienne Westwood.

In carrying out the assessment, HHJ Birss QC made some general points:

·In many PCC cases the costs may not approach the £50,000 limit (para 19) – see the comments on complexity below;

·The court has a discretion in the amount of the costs, but it is clear that the limits for each stage, and for all stages are intended to be adhered to. So, although departing from these limits is possible, other than in cases where the rules specifically provide for it (abuse and certificate of contested validity (CPR 45.41) the discretion to do so will be rarely, if ever, exercised. It will only be in the “most rare and exceptional case” (para 20);

·The costs awarded will depend on the nature and complexity of the case (CPR 45.42(4)) (para 24), and in simple cases there is no reason to suppose that the costs need reach the stage limit. In this case, with several trade marks, passing off and copyright infringement, the claim was quite complex (para 37).

·The demarcation of stages is to be understood in broad terms (par 28 to 30), so that, for example, pre-action costs may be covered by preparation of a statement of case if they contribute to identifying the content of the statement of case (para 30);

·The “Defence and Counterclaim” stage can include (depending on the facts) the claimant considering the defence (para 33).

And procedurally:

·Consider whether costs are payable to the other party (ie in respect of any element where the losing party is entitled to payment of some of their costs) (para 21);

·Break down, and provide a “statement of costs” for each of the relevant stages shown in the Table of stages. Preferably provide this in a single document (signed by the representative) (para 22);

·It is helpful to provide a summary table of costs for the stages as well (para 23);

·The Court will assess the appropriate costs for each stage (taking into account complexity as noted above (see para 24)). If they exceed the maximum, then they will be limited to the maximum (para 25);

·The Court will then add the costs for all stages. (Note that one “stage” may occur more than once. For example there were three applications in addition to the case management conference in this case.) If the total exceed the maximum it is limited to the maximum.

In this case, part of the costs were incurred in the High Court. These were (summarily) assessed on a High Court basis. Also VAT was due on most but not all of the amount (and VAT falls outside the limit on costs). The approach taken was to apply VAT to the assessed amount after deducting any amount not subject to VAT, although the option was left to apply a different approach in other cases. Finally interest was applied by choosing some date, probably where about half the costs have been incurred, and applying interest to all the amount due from that date.

The judgment also illustrates some of the reasoning and is a useful guide to carrying out an assessment.

The keenly-awaited Guide to the Patents County Court, which will help litigants make the most of their opportunity to litigate before England and Wales's revamped bargain basement litigation forum, has now been approved by the Chancellor and carries an updated list of web addresses and court fees.

The Guide has not yet been posted on the Patents County Court's web page, but the Chartered Institute of Patent Attorneys has kindly hosted the full text here. The document is a 26-side pdf. It is -- considering its content -- pleasantly readable and contains lots of useful things like telephone numbers and details of pro bono support.

Wednesday, 11 May 2011

Judge Colin Birss QC (Patents County Court, England and Wales) delivered his judgment earlier today on costs in Dame Vivienne Westwood OBE v Knight [2011] EWPCC 011 (not yet on BAILII; decision on liability here). The costs ruling is only nine pages long, but I've not had time to read and digest it. The important bit is the judge's conclusion:

"46. The practical application of the costs capping system in the Patents County Court was always going to raise issues to be addressed. Having now conducted an assessment under the scheme, none of the issues raised so far are particularly problematic. The costs capping system works and I am sure it can be readily applied to all the intellectual property disputes in the Patents County Court".

Tuesday, 10 May 2011

Having posted some interesting questions yesterday about the commencement in the Patents County Court (PCC) and the Patents Court (PC) on the same day of proceedings brought between the same parties, PatLit has received some interesting suggestions (including one posted comment) as to how the smaller party, having opted for the PCC, can maximise his chances of keeping the litigation there. One reader intersperses his answers between the questions:

1. Is there any Patents County Court or Patents Court Rule which specifically provides for a situation such as this? No. The intention is that the Act will be amended so that one set of proceedings can be brought in either the PC (or possibly the PCC) for simultaneous transfer applications).

2. Are all proceedings which are commenced on the same day regarded as being commenced simultaneously, or would the fact that the Patents County Court proceedings were commenced first be significant? I have discussed this with others. There is a principle that parts of a day are not divided legally. however, I think if one party knows that the other has issued proceedings when it issues proceedings, then the Court is likely to be less sympathetic.

3. Would it make any difference if the defendant had instituted proceedings for a declaration of non-infringement and/or revocation before the patent owner commenced his proceedings? It seems to me that the court first seised is likely to have a slightly greater pull than the other one. I think that when the act is amended this will likely become irrelevant. At present the principle is that if all things are equal then don't move the case. The court will never find that all things are equal, but that is not necessarily much help to a litigant considering what should happen.

4. Would it make any difference if the defendant had knowledge of the proceedings commenced by the patent owner in the Patents County Court when commencing proceedings in the Patents Court? See above.

5. What would be the patent owner's best and/or most economic strategy for seeking to keep all proceedings before the Patents County Court? Invite the other party to agree to a transfer and have a consent order made. If the other party will not agree then one of your correspondents (to the PCC page talking about transfer) has suggested that a written application can be made. The suggestion was apparently from counsel and worked. If this does not work then an application to the Court will be required. How easy this is depends strongly on how good is the case for the proceedings being in the PCC".

Another correspondent writes:

"Both courts can make directions of their own motion so, for someone in this position, it seems to me that the best thing might be to write to Judge Colin Birss (PCC) and David Kitchin (as the judge in charge of the Patents Court list) informing them of the parallel proceedings and asking whether either court is minded to make any transfer orders of its own volition, in particular if the courts consider it appropriate that arguments for transfer should take place in the PCC.

There is going to be an argument here at some point about consolidating proceedings and which court should hear the case. David has power to order transfer of the case from the PCC to the PC, but Colin does not have power to order transfer from the PC to the PCC. David might take the view that Colin can make the decision whether he will hear the case and order transfer from the PC expressly on the basis of liberty to apply to the PCC judge to transfer the case back together with the case already in the PCC. That will enable Colin to make a decision after due consideration of both cases if he believes it better that both cases are heard in the PC. Alternatively David will have to make the decision for both cases".

Following a short break for the Easter holiday, the PatLit PCC Series is back in full swing. Delicately directed by by the Chartered Institute of Patent Attorneys (CIPA), this series seeks to explain how litigation works in the recently-revamped Patents County Court (PCC) for England and Wales, taking as its theme a dispute between Cautious Co and IPOff Ltd as to whether IPOff has infringed the IP rights of Cautious in its robotic octopus. In this episode, the 26th, CIPA President Alasdair Poore considers the legal and tactical dimensions of making an offer, and how an offer to settle which is made by a claimant differs from one made by the defendant.

Readers may recollect that Cautious Co has brought proceedings against IPOff. IPOff makes the Robot Octopus football results predictor. Cautious has a patent relating to the predictor. The patent is challenged on the grounds that it is obvious, it doesn't work and is anyway a computer program or business method (infringement is denied too). The second claim is in relation to unregistered design right infringement in respect of octopus-shaped toys.

Over the Bank Holidays, IPOff has been thinking about ways of putting pressure on Cautious. Cautious’s earlier offerwas rejected by IPOff, which asserted that it was not an offer to settle at all. IPOff ‘s solicitor has now written to Cautious’s patent attorney with its own Part 36 offer. The offer is made on the following basis:·IPOff agrees that the unregistered design rights are valid and infringed, and undertakes not in the future to infringe them and to pay damages to be assessed;·Cautious agrees that its patent is invalid and not infringed.As it is a Part 36offer there is no specific provision in relation to costs as these are determined in accordance with Part 36.

Of course IPOff sees that they can change the design easily. If it can circumvent any patent claims, it can get back into the market. Currently just the existence of the claim is making marketing difficult.

Since Cautious made its offer, there has been a useful case, AB v CD([2011] EWHC 602 (Ch)). This is discussed below.

First, the effect of a defendant’s Part 36 Offer is not quite the same as for a claimant’s offer. For the claimant the incentive to settle needs to be greater; since a successful claimant would receive (most of) its costs anyway, a claimant obtaining a judgment at least as advantageous as its offer is entitled to indemnity costs and interest. In contrast the defendant is entitled (Part 36.14(2)) to (a) his costs from the date on which the relevant period expired; and (b) interest on those costs. This is only slightly different from the likely result of an offer “without prejudice save as to costs” or “Calderbank Offer”, so the need to ensure that the offer complies with Part 36 is probably less.

AB v CD is coincidentally a trade mark infringement case. It followed the usual procedure of a split trial on liability and damages. Both parties had made alleged Part 36 Offers in the course of the stage up to trial on liability, and the judge was now being asked to review whether they were effective Part 36 Offers.

The first difficulty was that the trial judge is not supposed to know that there is a Part 36 Offer in play, and certainly not to see the details – so a different judge had to consider this (and use pseudonyms in reporting it so that the trial judge would not be aware of the entire discussion). Perhaps this is a more acute difficulty in the PCC!

“In my judgment the offer must contain some genuine element of concession on the part of the claimant, to which a significant value can be attached in the context of the litigation.” (para 22). And at para 34 he asks: “But did the offer make any real concession of significant value, bearing in mind that the policy of Part 36 is to encourage the settlement of claims before trial and before any judgment has been given? In my view it did not, for the following reasons.”

He observes, taking a broad robust approach to whether there is any real concession, that:

“The order for delivery up of infringing items is in my view of negligible significance, given the re-branding exercise which has taken place. I would not be surprised if there were no material at all to be delivered up, and I find it difficult to imagine what it would consist of. Such allegations of continuing infringement as there are relate to the continued use of some of the impugned signs as Google adwords, or other forms of electronic infringement. There is no serious suggestion, so far as I am aware, that the defendants are currently using any infringing physical items in the course of their trade. With regard to publicity, it is true that the publication order requires the defendants to take certain steps at their own expense, but, that apart, the publication order achieves nothing of substance that the claimant could not have done for itself had its offer been accepted, except of course for publication of the judgment itself. … I accept the submission for the defendants that obtaining a reasoned judgment from the court following a trial cannot in itself be regarded as an improvement upon a Part 36 offer, because the policy of Part 36 is to promote the settlement of cases before trial. Further, in the light of the scope for publicity retained by the claimant, the confidentiality offered to the defendants was in my judgment also of no real value. Finally, the opportunity to obtain a certificate of contested validity in relation to the UK mark seems to me to take matters no further, because the advantage that it gives to the claimant is not an advantage in relation to the defendants (who would anyway be bound by the judgment, or in terms of the offer by the discontinuance of their counterclaim), but in relation to future proceedings by third parties. For the purposes of Part 36, it must in my view be regarded as a purely incidental advantage of proceeding to trial, and forgoing it was not a genuine concession offered by the claimant to the defendants.” (para 38)

AB v CD makes it clear therefore that it is difficult for a claimant to make a tactical offer of settlement, unless there is some genuine concession.

Note also that the claimant’s contention that it could not make a meaningful assessment of the defendants’s offer, without further information, was discounted to a large extent. However, in particular, the need for further information does not prevent the offer being a Part 36 offer; it only forms a ground on which the offeree might ask for the court not to apply the full rigour of Part 36, on the ground that it was not just to do so. (para 48, 49)

Interestingly, the defendant’s offer appeared to be expressed to be open only for 21 days – which in accordance with other cases would prevent it from being a Part 36 offer.

Do not forget (particularly as a defendant) that simple “without prejudice save as to costs” offers are still available, and may well have a similar effect. And also that a “without prejudice” offer is not the same. The latter may never be shown to the court other than as evidence of an agreed settlement.

Monday, 9 May 2011

This member of the PatLit team has just been asked some questions and he doesn't offhand know the answer. The scenario runs thus:

"I [in this instance "I" is a microcompany with very limited funds] instituted patent infringement proceedings in the Patents County Court against a much larger company. Later but on the same day as I had instituted proceedings, the defendant instituted proceedings against me in the Patents Court -- which is part of the High Court and a very expensive place to litigate -- seeking a declaration of non-infringement and/or revocation of my patent. I believe that I can apply to the Patents Court to have the defendant's action transferred to the Patents County Court, though I understand that this will take time and consume a proportion of the money available to me to bring the infringement proceedings in the first place".

The questions to be sharedI'd like to share with readers of this weblog are as follows:

1. Is there any Patents County Court or Patents Court Rule which specifically provides for a situation such as this?

2. Are all proceedings which are commenced on the same day regarded as being commenced simultaneously, or would the fact that the Patents County Court proceedings were commenced first be significant?

3. Would it make any difference if the defendant had instituted proceedings for a declaration of non-infringement and/or revocation before the patent owner commenced his proceedings?

4. Would it make any difference if the defendant had knowledge of the proceedings commenced by the patent owner in the Patents County Court when commencing proceedings in the Patents Court?

5. What would be the patent owner's best and/or most economic strategy for seeking to keep all proceedings before the Patents County Court?

Do please post your comments below or, if you cannot do so for technical or other reasons, please email them to me here with the subject heading "Same-day patent suits".

Proceedings Before the European Patent Office: a Practical Guide to Success in Opposition and Appeal, by Marcus O. Müller and Cees A.M. M...

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